Apple officially in 'bear market' after postelection sell-off

CUPERTINO -- Apple (AAPL) shares plunged to a five-month low Wednesday in the midst of a postelection sell-off, pulling shares to 20 percent below the peak reached less than two months ago, which investors term a "bear market."

Apple shares fell as low as $555.75 in the morning session of Wednesday's trading day, the lowest price for Apple shares since June 4. That price reflected a 21.2 percent drop from Apple's all-time high of $705.07, reached on Sept. 21, the launch day of the iPhone 5.

Apple stock suffered after the iPhone 5 launch despite sales of 5 million units in the first three days of availability because Apple was not able to meet demand for even more of the smartphones, as production issues kept them from providing more of the devices. Those issues have continued, with the chairman of Apple's manufacturing partner Foxconn, Terry Gou, admitting Wednesday that his company was "falling short of meeting the huge demand" for the iPhone 5.

The tech titan then introduced a new, smaller iPad, dubbed the iPad Mini, and a fourth-generation full-sized iPad, but those developments failed to stoke the stock higher, as has happened in the past. Apple announced it sold 3 million iPads in three days after the new tablets debuted on Friday, but that resulted in only small gains that were erased in Wednesday's fall.

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With the iPhone 5 and new iPads out, investors see little innovation on the horizon for the company, however.

"For now, everything has been refreshed and all the new products are out," Tim Ghriskey, chief investment officer of Solaris Asset Management, told Reuters. "Then there are questions about whether margins have peaked at this company."

However, Apple exhibited big losses earlier this year, dropping 16 percent at one point, but bounced back to set a record for largest U.S. market capitalization in history. The company is still easily the most valuable company in the United States in terms of market capitalization, the total worth of all its shares.

But bad news has piled on Apple lately. On the same day it announced 3 million iPads sold in three days Monday, International Data Corp. released a report showing the company's market share for tablets dropped considerably in the third quarter of 2012, from nearly two-thirds of the market to barely a majority.

Meanwhile, Samsung -- the South Korean tech giant with which Apple has battled extensively in court, claiming the maker of Galaxy tablets and smartphones copied the iPad and iPhone -- posted the largest percentage in the market for any company not named Apple since the iPad was introduced.

That news followed an executive shake-up that included the exit of iOS chief Scott Forstall, the software executive who had been with the company since cofounder and former CEO Steve Jobs brought him over from NeXT, the company he founded and then sold to Apple during his time away from the company.

In addition, Bloomberg News reported on Twitter late Tuesday that Apple lost a court case involving its FaceTime program, the popular video-chat software available on iPads and iPhones. Apple was ordered to pay $368.2 million to VirnetX for infringing on the company's patents.

Apple shares closed Wednesday at $558, a decline of 3.8 percent from Tuesday's closing price. Apple was not alone, as all three major stock indexes fell more than 2.3 percent Wednesday.

Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.